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The UK takes a position on the CJEU

7 September 2017

The UK's position paper on dispute resolution and the role of the CJEU begins the process of squaring the circle created by the UK's stated intention to retake control from the CJEU. As far back as the Prime Minister's Lancaster House speech in March, legal commentators noted careful reference to the direct jurisdiction of the CJEU. That word could become of crucial importance to negotiations, which will need to reconcile the EU's political requirement that the autonomy of EU law is preserved with a demonstrable end to the CJEU's current role in the UK. It is a circle that can be squared and exiting arrangements including free trade agreements and the Unified Patent Court provide indicators of where compromise may lie.

The Government has released a position paper revealing its opening gambit in relation to the negotiations on dispute resolution between the UK and EU and the role of the Court of Justice of the European Union (CJEU) after Brexit.

The paper states that the Government's commitment to "taking back control" of the UK's laws and "ending the jurisdiction" of the CJEU is a reference to an end to the CJEU's direct jurisdiction in the UK. As outlined in our previous blogs on the CJEU's post-Brexit role and options for dispute resolution mechanisms, the Brexit White Paper and Theresa May's Lancaster House Speech had left open the possibility of the more pragmatic approach that the Government now appears to be taking. The central tension which that approach seeks to resolve is the need for an effective dispute resolution mechanism which promotes the consistent application of the terms of the UK and EU's agreements while meeting political demands for a return of sovereignty to the UK and for respect for the integrity of the EU legal order.

The paper draws a distinction between:

(a)the enforcement by individuals and businesses of their rights arising from the UK- EU agreements; and

(b)dispute resolution to address disagreements between the UK and EU on the interpretation or application of the terms of those agreements.

As regards enforcement of the agreements, the paper states that, where agreements between the UK and EU give rise to rights and obligations for individuals and businesses, they will be given effect in UK law. Individuals and businesses in the UK will therefore be able to enforce those rights and obligations within the UK legal order "in accordance with the normal principles of administrative law" by challenging decisions of the relevant competent authorities. The Government thereby seeks to end the direct jurisdiction of the CJEU while preserving the substantive rights of individuals.

In relation to dispute resolution, the position paper repeats the approach taken in the White Paper and sets out a number of options based on existing models in international trade agreements, including joint committees and arbitration models. However, the position paper also proposes that where terms of EU-UK agreements replicate EU law, those terms should be "interpreted and applied in line with any relevant interpretations of the CJEU which preceded the agreement" and further, "account is to be taken" of post-agreement CJEU judgments. The paper states that this approach would be particularly valuable in relation to specific areas of law where the UK-EU agreements seek to avoid divergence. The paper also appears to moot the idea of references to the CJEU for a binding interpretation of EU law concepts by the dispute resolution body which governs the future EU-UK agreements.

It appears therefore that the CJEU will continue to play an on-going but "indirect" role in the UK legal system after Brexit. That role will likely extend to influencing the interpretation and enforcement of the UK and EU's obligations in the agreements they reach as part of the Brexit process.

How will the EU view the paper?

The European Commission has not yet formally responded to the position paper but it has on previous occasions, including in its negotiating directives published in May and a position paper published by its Brexit taskforce last month, stressed the need "the autonomy of the Union and of its legal order" to be respected. In relation to the Withdrawal Agreement, the Commission envisages an alternative dispute settlement mechanism only in relation to the interpretation of terms "not relating to EU law" and where the mechanism "offersequivalent guarantees of independence and impartiality" to the CJEU.

What happens next?

There remains therefore a significant gulf between the positions of the UK and EU in relation to the role of the CJEU post-Brexit despite the slight softening of the UK Government's approach in this most recent position paper. The EU's stance, that it can be bound by a dispute settlement body other than the CJEU in only very limited circumstances, is fundamentally at odds with Theresa May's commitment to remove the influence of CJEU from the UK legal system. It is likely that a constructive result will require compromises on both sides.